Though no major warehouse disruptions have been reported, experts warn that the future rebuilding efforts in the wake of California’s Southern wildfires could severely strain supply chains, especially concerning the demand for building materials.

The recent wildfires have caused widespread devastation in neighborhoods like Altadena, Lake Hughes, Pacific Palisades, and San Diego County. As of January 27, the fires remain active, burning through a total of 54,519 acres, though progress is being made, with containment levels at 99% for the Eaton Fire and 98% for the Hughes Fire, according to the California Department of Forestry and Fire Protection (Cal Fire).

Warehouses Are Unaffected, But Supply Chains Are Vulnerable

‍The immediate impact on logistics and warehouses has been minimal, as many warehouse facilities are located outside the fire zones. Lisa Anderson, president of LMA Consulting Group, noted that, "Even businesses outside the fire zones are experiencing ripple effects from power outages, infrastructure strain, and shifting consumer demand."

Though logistics hubs like those in Riverside, Upland, Fontana, and San Bernardino, part of the Inland Empire, remained largely unaffected, some manufacturers were disrupted. Anderson cited a client in the building products sector who faced a week-long power outage due to preventative shutdowns, affecting production despite being outside the fire's direct path.

Consumer Behavior and Retail Supply Chain Shifts‍

Although warehouses have largely avoided damage, the fires are still affecting retail supply chains. As Anderson explained, “A store in a local area devastated by the fires could have burned down. As a result, local residents from that specific store might shop in other areas for essential items they lost in the fire.” This shift in consumer demand could lead to changes in inventory management as retailers work to adjust to the new buying patterns of displaced residents.

Rebuilding Efforts Could Drive Surge in Demand for Building Materials

‍Experts predict that the aftermath of the fires could trigger a significant uptick in demand for building materials, such as drywall, plumbing, cabinetry, and roofing supplies, once reconstruction begins in earnest. According to CBRE experts, the rebuilding process could take two to three years as infrastructure must be reconstructed before any housing construction begins.

Robert Peddicord, executive managing director at CBRE’s South Bay operations, explained that, “Most of the communities are talking about construction won’t start for two to three years because obviously the infrastructure needs to be rebuilt first. First, you need to remove all the waste, and then the infrastructure needs to be rebuilt.”

Temporary Storage and Space Shortages

‍John Morris, president of Americas Industrial & Logistics at CBRE, shared his concern that once building materials become available, there will be increased demand for storage space, especially in the Los Angeles area. “Some of that might be Class A big bulk warehousing like the kinds of facilities that are used to ship e-commerce and so forth. But I think most of that is going to be in less functional ... kinds of buildings that just are going to be needed for temporary storage.”

As more materials flood into the area, demand for temporary storage solutions will likely push up warehouse prices, making it harder for businesses to manage logistics. Additionally, Morris noted that there could be an increased need for outdoor industrial storage to house larger materials like beams and poles, which require significant space.

Supply Chain Resilience and Lessons Learned‍

The wildfires highlight the need for stronger supply chain resiliency moving forward. Anderson emphasized the importance of diversifying manufacturing locations, so businesses can maintain continuity even when their primary facilities face disruptions. "Businesses have to find ways to carry on in order to support their customers," she said.

The broader lesson, according to Anderson, is that businesses must plan for potential disasters by having manufacturing options outside of their primary location. This approach would help maintain production levels during unexpected disruptions, such as power outages, which have been common during these fires. This type of contingency planning is crucial to ensuring that businesses can continue functioning despite widespread crises.

With the wildfire season affecting many regions, including other areas of California, the ability to adapt supply chains to these realities will be critical. As rebuilding efforts move forward, the logistics and manufacturing sectors must be agile and prepared to respond to changing demands and challenges.